Samsung Electronics posted its slowest quarterly profit growth in more than a year on Tuesday as its Galaxy S9 device missed sales targets and competition heated up.
The company said operating profit from the mobile business recorded its steepest rate of decline since the first quarter of 2017, as cheaper Chinese-made handsets put pressure on margins.
Higher marketing expenses and the disappointing performance of the flagship S9 smartphone, which fell short of its sales target, weighed on its mobile performance, Samsung said.
Samsung hopes that foldable phones will become the next big thing. Its screen manufacturing unit said last week its unbreakable, bendable screen had passed U.S. safety testing, a key step towards bringing foldable phones to market.
The mobile business booked a 34 percent fall in operating profit to 2.7 trillion won ($2.4 billion) in the second quarter, its biggest decline since the Galaxy S7 was Samsung's flagship model early last year.
The world's biggest chip and smartphone maker said operating profit rose 5.7 percent to 14.9 trillion won ($13.3 billion) in the second quarter.
Revenue for the April-June period fell 4 percent to 58.5 trillion won.
While the mobile business struggles, the chip business remained Samsung's top earner in the second quarter as sales to the cloud-computing and crypto-currency industries propped up DRAM chip prices even as NAND flash memory prices slipped.
The chip unit posted a record 11.6 trillion won operating profit in the second quarter, up 45 percent from a year ago and nearly 80 percent of its total operating income.
Samsung said demand for DRAM chips, its main memory product, would stay strong in the second half thanks to the growth of server data centers used for cloud computing.